Gibbons was the earliest test of federal authority under the Commerce Clause of the U.S. Constitution, which grants Congress regulatory power over foreign and interstate commerce. The findings of the Court in Gibbons not only paved the way for future expansive use of the clause, but also reiterated the subordinate role of state authority under the Constitution.

Shortly after the turn of the century, when Robert Fulton first successfully demonstrated his steamboat on the Hudson River, the state of New York granted him a monopoly over the use of steam-powered craft in that state's waters. In turn, Fulton licensed other operators to do the same, under the aegis of the state monopoly. Ogden was one of those licensees.

Although the state courts routinely upheld the monopoly, it attracted controversy and litigation as outside entrepreneurs tried to share in New York trade.

Gibbons was a steam craft operator who held a federal coasting license, and routinely ran his competing boats from New Jersey to Manhattan in violation of the monopoly. Unsuccessful at defending his position in New York courts, his appeal wound up before the U.S. Supreme Court in 1824.

In asking the Court to overturn the state monopoly Gibbon's lawyer, orator Daniel Webster, warned against so narrow a construal of federal commerce power as to create a virtual tangle of local ordinances. He sought an interpretation of the Commerce Clause that provided for exclusive national power over interstate commerce.

In turn, Ogden's lawyers argued that states had long legislated over issues affecting interstate commerce, and ought to have power at least concurrent with that of Congress.

Writing for the unanimous majority, Chief Justice John Marshall found a simple conflict between state and national interests in that Gibbons held a federal license. Adopting a position close to that espoused by Webster, Justice Marshall established that the federal interest would come first in any argument over interstate commerce. While reading the commerce power very broadly -- to include the objects and actions bordering commerce, as opposed to only the actual exchange of goods -- Marshall held back from the "exclusive power" argument out of fear that it would ignite the slavery issue. This reticence in his opinion prevented the Court from making a much wider-ranging pronouncement on the power of Congress.

Nonetheless, the basic posture that national interests would come first over those of the state formed the base upon which expansive readings of the Commerce Clause have since built. Though interrupted by very conservative hands-off interpretation toward the end of the nineteenth century, this doctrine opened the door for civil rights legislation in general, and intrusion into private business specifically in recent decades.

As precedent, Gibbons is difficult for any fan of economic freedom to get comfortable with. On the one hand, the monopoly established by the state of New York -- the key causation for this case -- is anathema to a free market. On the other, the emergent use of the Commerce Clause to legislate private business morality challenges not only economic freedom, but the very concept of liberty inherent in the nation's founding.